Reflections on Living in Another World

Menu

The High Road: With disclosure doubts, don’t ask

(Flickr photo by Auntie P)

Have you heard this observation before?

If you have to ask, you already know the answer.

Naive sellers may ask their listing brokers whether a certain defect needs to be disclosed. The most sophisticated sellers know better than to ask their agent: They appreciate that the law obligates brokers to disclose defects of which they are aware.

At the same time, New York State is among the most permissive in the nation when it comes to seller disclosures.

Laws require owners to attest to lead paint, for example, but little else. And unlike other jurisdictions — for example, Maryland — brokers have to disclose not only material defects that come to their attention but defects of which they should have knowledge.

In other words, brokers elsewhere have to ask the right questions of themselves, their sellers and any inspectors.

Although a statututory requirement is one thing, is it not also true that a moral imperative is quite another?

I hear sellers out there arguing that, hey, their homes are their biggest investment. Caveat emptor. Let the buyer beware. Screw buyers who don’t perform their due diligence and investigate a property thoroughly.

Money matters, no?

No! At least not to me, not at the cost of acting honorably. And certainly it matters to the other side.

Doing the right thing matters.

If you as seller have to ask whether something needs to be disclosed, you already know the answer: Disclose you must!

4 thoughts on “The High Road: With disclosure doubts, don’t ask”

That *is* a credible argument, and one reason why (at least some) disclosure is in the seller’s interests. The Grey Zone sits where seller does not want disclosure unless legally required, whether or not the agent thinks something *should* be disclosed. In an extreme case, agent should resign the listing if seller insists on no disclosure of something agent feels strongly about; in many cases, agent simply does what is best for the seller by not disclosing.

It is a little hard to make the fine point fine without fact scenarios, yet getting into hypotheticals would make this a long argument.

Sounds simple, right? But as a fiduciary, there is an interesting (long) argument to be made that the seller’s agent has to consider FIRST whether disclosure is in the best interests of the seller (assuming not legally mandated). I can argue that anything the buyer’s team is likely to discover in diligence is in the seller’s interests to disclose up front (those windows, as in the BU piece), but beyond that it gets grey in a hurry.